All language subtitles for 9. Double Bottom

All right, let's get a little alphabetical, right?

So one of the more popular or common, I should say, in popular trading patterns is a double bottom

chart pattern, and they're more common than a lot of other types of chart patterns and double bottoms

and double tops.

Well, let's have a double bottom chart pattern, because it's going to look like the letter W, right.

And what's happening is you have a downward trend and it's retesting of these lows at the bottom of

the W.

And the idea is it's going to predict a price breakout.

It's going to break out of that trend or reverse out of the downward trend and going to break out to

the upside.

That's the idea is under certain conditions, we're now going to break out to the upside.

So let's look at that and how those form and how we can trade off of those.

So if we look at this example, the you know, all the prices high, too low, made into a line chart

here.

And it looks like a w you do you see the W there on the left there.

And the idea is this retesting of the lows is the is the idea.

So in that they will predict the price break up to the upside under certain conditions, as we mentioned.

So if you see the double on the left here, if not here you go, you can kind of see how the W is forming.

So you can see the prices were higher.

They go down, then they bounce up and they go down, amounts up again.

So that's the idea of the W part of it.

Now, let's talk about how do we trade this?

I mean, so we see a W that's nice, but how does this really work?

Right.

So if you see we start we're starting with a downward trend.

So all of our data double bottom, it's a downward trend and it's going to reverse is the idea.

So you're going to hit bottom basically twice.

You know, think of like those would be we could have drawn a support line along the bottom, but you

can see where the prices hit the first bottom and then they back up into the middle of the W and they

reach a peak and they go back down to the bottom informing the next side of the W, and then after that

they go back up.

So that's our double bottom, right?

Once we've hit the bottom twice, we've now formed a double bottom.

And what we're looking for is that it's going to hit that confirmation point.

You would that you could also call it a resistance line.

If this was a rectangle, it would bounce off that resistance point, keep going back down and kind

of trade with a narrow channel.

But when we have a double bottom, it's actually going to break through that point right there after

the second bottom.

And that's your confirmation point.

Once it's broken through there, you know, a new trend is forming.

And you used your upward trend type analysis, the on a second touch or there's a you now have when

we talk when we look at drawing trend lines.

But the idea is that's your confirmation point that is broken through that top of the middle part of

the W.

You can see where I draw this line straight across and then you buying there after it's gone up above

it a little bit, maybe over a period or two or three.

And you're now going to ride this uptrend.

And this is very common for a pullback to happen then.

So we've been on this long downtrend, hit bottom twice, broke through at the top, and now it's and

now it's reversed from a downtrend to an uptrend.

But there's little bit of pullback, a little bit of profit taking.

Not unusual, actually very common.

And actually maybe dip below that confirmation point.

But the idea is hang in there because the idea is it's going to then continue with a double bottom.

It's going to work is going to continue on that uptrend.

You may just keep going on that uptrend.

But having a pullback with profit taking is not unusual.

And that's OK.

Just be aware.

So when we buy in there, we can then ride that uptrend up and we could sell at the top there if we

want to take a short term profit.

But the idea of a double bottom is we're maybe looking for that upward trend.

So if we're a double bottom, there are some conditions to be met, some generally accepted conditions.

And typically you're looking for a minimum of 10 days between the lows now could be months.

So this is a longer type of chart pattern.

I suppose you could trade it over, you know, shorter periods.

But, you know, traditionally you're looking at these sorts of trading over days, a minimum ten days

between the lows.

So they'll between those two bottoms.

And it could be months if you're looking at longer periods.

And the variation between the lows is no more than four percent.

There truly are within each other very narrow or very likely.

If you draw a line along the bottom, they're you know, they're very close to that support little support

line.

So there isn't a leak.

It actually looks like a W it doesn't look like something like a lightning bolt keeps going down.

It's looks like a W that's formed there.

And then that Senator Lott up move is a minimum of ten percent from the lower of the two bottoms.

If it just goes up a couple of percent, you got this really funky looking W that's not it.

Right.

So it needs to move up ten percent from the bottom and really form.

It may not be perfect w nothing.

It's not going to look visually perfect, but it's going to look very clearly like a W is the idea and

then the price must move above the confirmation line.

That's the important part of a double bottom chart pattern.

It's got to break through that confirmation point to show a true reversal.

You know, there may be a pullback later.

It's got to break through significantly through that confirmation line.

So, you know, you're looking for that as well.

So when you're looking to train a double bottom, you're you need to make sure that these these conditions

are met along the way.

But it can be a very powerful pattern to trade at.